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Introduction |
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Top 10 things |
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The details: |
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The basic flavors |
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Which plan is right for you? |
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Money-saving strategies |
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Your legal rights |
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Glossary |
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Take the test |
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Lessons:
About Money
101
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There are two types of plans, each of which has far-reaching consequences.
There are two basic types of insurance: indemnity plans and managed care. In general, indemnity insurance -- also called "fee-for-service" -- gives you greater freedom and flexibility than managed care. However, you'll pay more out of pocket for the health care you get. With indemnity coverage, you can choose any doctor, hospital, laboratory or other medical provider. As long as your insurance contract includes the service performed, insurance will cover it. However, it won't pay the entire charge. You'll have to satisfy an annual deductible -- generally a few hundred dollars -- before insurance even kicks in. Then, you'll owe a portion of each bill, called a co-payment, normally 20%. If the provider you choose charges unusually high fees, your share may be considerably higher. That's because your insurer will base its 80% share on the "usual and customary" fee for the service in your area, not on the actual bill. As a rule, indemnity insurance covers only illness or accidents; it doesn't pay for preventive care such as flu shots or birth control. Depending on your policy, it may or may not pay for prescription drugs or psychotherapy.
In its pure form, managed care flips indemnity coverage 180 degrees. With a health maintenance organization (HMO), there are no deductibles. Co-payments are fixed and low -- generally $15 or less -- and preventive care, drugs and mental health treatment are usually covered. However, you can choose only among doctors, hospitals and other providers who have contracts with your HMO, and you can receive only medical services authorized by the plan. If you use nonauthorized providers or receive nonauthorized care, your HMO will not pay any portion of the bills.
Because many people are uncomfortable with these restrictions, managed care has evolved to include hybrid plans that blend HMOs with some of the features of indemnity coverage. With a point-of-service plan (POS), for instance, you can keep your costs low by using a network of doctors and hospitals that have contracts with your insurer. However, if you choose, you can go outside the network, but you'll pay a deductible and higher co-payments. Competitive marketing has produced other permutations, such as the "open access" HMO that allows you to see a network specialist without a referral.
The only way to know for certain what your options and costs are is to carefully read the descriptive materials and question anything that's not clear. For general help in understanding health insurance, check the federal Agency for Health Care Policy and Research or the American Association of Health Plans. Your state insurance department may also offer online help. New Yorkers, for instance, can find a "Guide for HMO and Point-of-Service Coverage" at www.ins.state.ny.us.
Once you grasp the basics, you're ready to make informed choices. The next section tells you how to find the coverage that best suits your needs.
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